Credit Availability and the Structure of the Homebuilding Industry

34 Pages Posted: 2 Dec 2008

See all articles by Brent W. Ambrose

Brent W. Ambrose

Pennsylvania State University

Joe Peek

Federal Reserve Banks - Federal Reserve Bank of Boston

Abstract

We investigate the role of disruptions to the structure of the homebuilding industry due to fluctuations in the availability of bank credit. We find a sustained decline in the large private homebuilder market share series over the period from 1988 to 1993 when many banks with deteriorated health reduced their lending in order to raise capital ratios. Regression analysis at the metropolitan statistical area level supports the hypothesis that, in areas where banks were less well capitalized and had more problem construction loans, the market shares of large private homebuilders that relied primarily on bank credit to finance their production suffered at the expense of the public homebuilders that had better access to external funds, in large part due to their direct access to public capital markets.

Suggested Citation

Ambrose, Brent W. and Peek, Joe, Credit Availability and the Structure of the Homebuilding Industry. Real Estate Economics, Vol. 36, Issue 4, pp. 659-692, Winter 2008. Available at SSRN: https://ssrn.com/abstract=1308710 or http://dx.doi.org/10.1111/j.1540-6229.2008.00226.x

Brent W. Ambrose (Contact Author)

Pennsylvania State University ( email )

University Park, PA 16802-3306
United States
814-867-0066 (Phone)
814-865-6284 (Fax)

Joe Peek

Federal Reserve Banks - Federal Reserve Bank of Boston ( email )

600 Atlantic Avenue
Boston, MA 02210
United States

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